Problem 24-5A Coolplay Corp. is thinking about opening a soccer camp in southern California. To s...

Problem 24-5A

Coolplay Corp. is thinking about opening a soccer camp in southern
California. To start the camp, Coolplay would need to purchase land
and build four soccer fields and a sleeping and dining facility to
house 150 soccer players. Each year, the camp would be run for 8
sessions of 1 week each. The company would hire college soccer
players as coaches. The camp attendees would be male and female
soccer players ages 12–18. Property values in southern California
have enjoyed a steady increase in value. It is expected that after
using the facility for 20 years, Coolplay can sell the property for
more than it was originally purchased for. The following amounts
have been estimated.

Cost of land

$300,600

Cost to build soccer fields, dorm and dining facility

$601,200

Annual cash inflows assuming 150 players and 8 weeks

$921,840

Annual cash outflows

$841,680

Estimated useful life

20 years

Salvage value

$1,503,000

Discount rate

8%

Click here to view PV table.

Calculate the net present value of the project. (If
the net present value is negative, use either a negative sign
preceding the number eg -45 or parentheses eg (45). Round answer to
0 decimal places, e.g. 125.For
calculation purposes, use 5 decimal places as displayed in the
factor table provided.)

Net present value

$

Should the project be accepted?

The project

shouldshould not

be accepted.

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To gauge the sensitivity of the project to these estimates,
assume that if only 125 players attend each week, annual cash
inflows will be $806,610 and annual cash outflows will be
$751,500.

What is the net present value using these alternative estimates?
(If the net present value is negative, use either a
negative sign preceding the number eg -45 or parentheses eg (45).
Round answer to 0 decimal places, e.g. 125.For calculation purposes, use 5 decimal places as
displayed in the factor table provided.)

Net present value

$

Should the project be accepted?

The project

shouldshould not

be accepted.

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Assuming the original facts, what is the net present value if
the project is actually riskier than first assumed and a 10%
discount rate is more appropriate? (If the net present
value is negative, use either a negative sign preceding the number
eg -45 or parentheses eg (45). Round answer to 0 decimal places,
e.g. 125.For calculation purposes, use 5 decimal places
as displayed in the factor table provided.)

Net present value

$

Should the project be accepted?

The project

shouldshould not

be accepted.

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Assume that during the first 5 years, the annual net cash flows
each year were only $40,080. At the end of the fifth year, the
company is running low on cash, so management decides to sell the
property for $1,334,664. What was the actual internal rate of
return on the project? (Round answer to 0 decimal
places, e.g. 125.For calculation
purposes, use 5 decimal places as displayed in the factor table
provided.)

Coolplay Corp . is thinking about opening a soccer camp in southern California . To start the camp , Coolplay would need to purchase land and build four soccer fields and a sleeping and dining facility to house 150 soccer players. Each year , the camp would be run for 8 sessions of 1 week each

Problem 24-5 A Goldbloom Corp . is thinking about opening a soccer camp in southern California . To start the camp , Goldbloom would need to purchase land and build four soccer fields a sleeping and dining facility to house 150 soccer players. Each year , the camp would be run for 8 sessions

Coolplay Corp . is thinking about opening a soccer camp in southern California . To start the camp , Coolplay would need to purchase land and build four soccer fields and a sleeping and dining facility to house 150 soccer players. Each year , the camp would be run for 8 sessions of 1 week

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